M.E. Gilligan Consulting, dba
Martin & Associates
Relationship and Organizational Strategic Consulting
Foreign / Domestic Business

Strategic Relationships ... q&a

WHY STRATEGIC RELATIONSHIPS FAIL : [Back to Strategic Relationships]

        Lack of adequate committed funding;
        Letting emotions/egos drive the deal;
        Obsessing on peripheral (tax haven, incentives) vs. core issues (market, profit);
        No due diligence (ready - fire - aim - retreat);
        Lack of middle management/professional employee support;
        Lack of operational post-signing plan;
        Win/lose attitude on one side.

    CRITICAL DRIVING FORCES FOR SUCCESSFUL RELATIONSHIPS : [Back to Strategic Relationships]

        Strategic Goals that match;
        Market conditions attractive to both;
        Resources that match the needs of the relationship;
        Available management talent suitable for the job;
        Multiple levels of buy-in on both sides - no major "hold-outs";
        Shared risk on both sides commensurate with participation;
        Visible management commitment;

    STRATEGIC ALLIANCE DEFINITIONS : [Back to Strategic Relationships]

        Vendor/Supplier: Contractual relationship resulting from arms-length third-party negotiation based on transactional consideration, usually involving well-defined products and/or services;

        Subcontractor: Contractual relationship including significant contribution of skilled labor and/or engineering/management and characterized by use of specifications, technical expertise, large-scale labor input;.

        Licensee: Contractual relationship based on the assignment of technology, product, trademark, process or other technology to another (third-party) for commercial exploitation of the product, process, technology, or name, where residual ownership remains with the licensor;

        Sales Representatives: Contractual relationship based on an individual’s or company’s contacts in a market region or territory with compensation based on a percentage of results (usually sales) to end-users, where all liability and warranty risks remain with the manufacturer;

        Stocking Distributors: Contractual relationship based on the purchase and re-sale of products by a third-party with independence to re-sell to sub-distributors (dealers) or end-users and to set prices based on what the market will bear and independently of the manufacturer;

        O.E.M. (Original Equipment Manufacturers): Contractual relationship with the manufacturing or service-provider end-user of a component or service on an annual or product model basis into which the component or service will be added and the total product/service will be sold or leased to an end-user customer;

        Strategic Marketing Alliance: Contractual (or informal) relationship with minimum overlap competitor or compatible peer company or vendor or customer with interest or coverage in the same markets, products, technology, or services;

        Franchise: Strict contract relationship, including a license for a technology or service or business process, typified by an operating model and detailed operating procedures which creates multiple business entities with ownership separate from, but procedural control remaining in, the franchising company;

        Joint Venture: Contract or equity relationship set up for a specific business goal, to service a specific market or commercialize a specific technology which creates a new business entity and which exists only to fulfill its charter under the control of its partners in accordance with the charter;

        Merger: Equity relationship in which two or more companies are joined to gain advantages of sales, markets, technology, personnel, normally with (usually) only one of the business entities surviving in terms of dominant management, names, and technology;

        Acquisition: Equity or Contract relationship in which either stock (equity) or assets (contract) are acquired resulting in the growth of the acquiring company and (usually) the demise of the acquired company or the business unit which was the owner of the assets or equity;

        Subsidiary Company: Equity relationship in which an operating department/division is incorporated as a separate company with the majority of the equity owned by the parent company and with limited recourse back to the parent for liabilities, reputation, or manpower;

        Expanded Company Division/Department: Organizational relationship in which a department or division is granted profit & loss status, with independent budget & controls but which is not a separate company and is legally 100% a part of its owners.

    ORGANIZATIONAL STRUCTURE : [Back to Strategic Relationships]

    EXTERNAL CORPORATE STRUCTURE:
    (vendors, subcontractors, licensees, sales reps, distributors)
    PLUSES MINUSES
    Control (only what paid)
    Quick (place order)
    Less Risk (known product)
    Schedule (hit ground running)
    Historic Success Rate
    Multiple Sources
    Independence (other goals)
    Rigid (per terms)
    No Forward Position (no product)
    Instability (financial risks)

    EXTENDED CORPORATE STRUCTURE:
    (OEM’s, strategic alliances, franchises, joint ventures)
    PLUSES MINUSES
    Participation (mutual benefit)
    Flexible (mutual plan)
    Investment (little up-front $)
    Less Resource Drain (additive)
    Risk Sharing
    Historic Success Rate Schedule (start-up & org time)
    Complementary Strengths
    Less control (other management)
    Time-Consuming (negotiations)
    Management Skill (not direct)
    Long-Term Commitment (focus)
    Non-Compete w/ Principals
    Culture Clashes (separate org)

    INTERNAL CORPORATE STRUCTURE:
    (mergers, acquisitions, subsidiary company, expand units)
    PLUSES MINUSES
    Control (common owners)
    Synergistic Resources
    Can Compete w/ Owners
    Immediate Sales Growth
    Immediate Profit (sale/use)
    Time-Consuming
    Heavy Investment ($$$)
    Management Skill &Conflict
    Total Risk
    Schedule (start-up & org time)
    Historic High Failure Rate
    Loss of Corporate Identity

    CONSULTING APPROACH  [Back to Strategic Relationships]

    GENERAL APPROACH

    OWNER'S GOALS

    COMPANY GOALS (STRATEGY)

    OBJECTIVES

    TACTICS (BUDGET)

    TIME & MONEY & RESOURCES

    REPORTING

    MEASUREMENT & ACCOUNTABILITY

    STRATEGIC EVALUATION
    Strengths ---- Weakness ---- Assumptions ----Threats
    TIME LINE FOR OBJECTIVES
    Near Term (0-6 Mo) Must do (Tactics)
    Intermediate (6 - 18 Mo) Will do (Objectives)
    Long Range (2 - 5 Yr) Should do (Plans)
    Strategic (10+ Yr) Want do do (Vision)
    MARKETING/SALES
    Surveys/Focus Groups Clients' Eye View
    Market Evaluation Numbers (Now & Future)
    Distribution/Organization Strategy
    Ads, Promotions, Website Tactics
    IMPLEMENTATION
    Communication by Mgmt What are we trying to do? & why?
    Training by Mgmt & Trainers How are we going to do it?
    Incentives & Rewards What's in it for me?
    Reinforcement by Mgmt What you do speaks louder than what you say!
    ROLE OF CONSULTANT
    Analyst & Reporter What's going on here?
    Coach Assist in game plan development
    Participant Specific jobs & review function
    Website Builder